In my post last week, I explained how Netflix traffic was experiencing congestion along end-to-end paths to broadband Internet subscribers, and how the resulting congestion was slowing down traffic to many Internet destinations. Although Netflix and Comcast ultimately mitigated this particular congestion episode by connecting directly to one another in a contractual arrangement known as paid peering, several mysteries about the congestion in this episode and other congestion episodes that persist. In the congestion episodes between Netflix and Comcast in 2014, perhaps the biggest question concerns where the congestion was actually taking place. There are several theories about where congestion was occurring; one or more of them are likely the case. I’ll dissect these cases in a bit more detail, and then talk more generally about some of the difficulties with locating congestion in today’s Internet, and why there’s still work for us to do to shed more light on these mysteries.[Read more…]

The FCC recently released the Open Internet Order, which has much to say about “net neutrality” whether (and in what circumstances) an Internet service provider is permitted to prioritize traffic. I’ll leave more detailed thoughts on the order itself to future posts; in this post, I would like to clarify what seems to be a fairly widespread misconception about the sources of Internet congestion, and why “net neutrality” has very little to do with the performance problems between Netflix and consumer ISPs such as Comcast.

Much of the popularmedia has led consumers to believe that the reason that certain Internet traffic—specifically, Netflix video streams—were experiencing poor performance because Internet service providers are explicitly slowing down Internet traffic. John Oliver accuses Comcast of intentionally slowing down Netflix traffic (an Oatmeal cartoon reiterates this claim). These caricatures are false, and they demonstrate a fundamental misunderstanding of how Internet connectivity works, what led to the congestion in the first place, and the economics of how the problems were ultimately resolved.[Read more…]

Netflix reported a second-quarter profit last week as customer demand continues to drive a transition in the company’s primary delivery model from DVD-by-mail to Internet streaming. According to TheNew YorkTimes, “[t]he company’s net losses among DVD-by-mail subscriptions outpaced its gains in net streaming subscriptions in the United States, reflecting the continued challenge of converting from a physical disc business to one predominately online.” The company, of which I am a longtime subscriber and fan, has famously struggled with the business implications of this transition since it began offering streaming service in 2007. (Remember the Qwickster debacle?) Those business implications derive in some interesting ways from copyright law.

The DVD-by-mail model, on which Netflix built its success, was enabled by the first sale doctrine, which cuts off a copyright owner’s distribution right with respect to a particular copy of a copyrighted work when that copy is first sold. Because of the first sale doctrine, Netflix was not required to get permission from movie studios to set up its business. In the early days, Netflix simply bought DVDs—lots of them—from whatever retailers were selling them and then rented those DVDs to its customers. If the movie studios didn’t like that, well, too bad.[Read more…]

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